Microsoft is eying China with plans to develop more mobile and cloud-based technologies for the country at a new subsidiary in Shanghai, despite the regulatory hurdles the U.S. company has been facing in the country.

The subsidiary includes staff from the company’s cloud and enterprise engineering group in China, a team that’s been contributing to Microsoft Azure, Windows Server and other Internet-based products, Microsoft said Monday.

Called Microsoft Asia-Pacific Technology Company, the subsidiary will also focus on developing smart city services with local partners.

Microsoft launched the company at a time when the company is expanding its enterprise business in China. In 2012, Microsoft announced its ”go big” strategy for the country, a plan that called for the hiring of 1,000 employees.

Earlier this year, the tech giant made both Microsoft Azure and Office 365 available to all customers in China. It’s hoping to tap China’s growing number of local businesses that are expanding globally.

Despite its ambitions, Microsoft has recently been facing more regulatory obstacles from the Chinese government. In May, the central government procurement center banned the purchases of certain IT systems installed with Windows 8. No explanation was given, but a state-controlled publication said the ban resulted from security concerns.

In July, the government also began raiding Microsoft offices in China as part of an anti-monopoly investigation. Although the specifics of the government probe are still not public, Chinese authorities have said it relates to the company’s Windows and Office software.

Despite the issues with the Chinese central government, the new subsidiary has the support of a Shanghai municipal commission, Microsoft said.

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